D196 WGU Exam Questions With All Correct Detailed Answers Rated A+ (verified)

D196 WGU Exam Questions With All Correct Detailed Answers Rated A+ (verified) What are the important influences on accounting? - Answers - Important influences on accounting is the development of the "generally accepted accounting principles"(GAAP), international business and ethical consideration. What is the role of ethics in accounting? - Answers - being an accountant requires honesty and integrity, as well as professional judgement. So having ethics in accounting is very important. Who uses accounting information and why? - Answers - Potential investors and creditors use accounting information, but basically everyone uses accounting information. They use it to make internal and external business decisions. What are the three main functions of accounting? - Answers - The 3 main functions of accounting are: Analyzing, Bookkeeping, and Evaluating (ABE). What is the role and purpose of accounting? - Answers - Role: To help track income and expenditures, and to provide investors, management, and government with financial information. Purpose: To accumulate, measure, and communicate financial information about businesses and other organizations. The Financial Accounting Standards Board(FASB) - Answers - An organization responsible for studying accounting issues and establishing standards a) Private group b) Public process c) Establishes GAAP The Governmental Accounting Standards Board(GASB) - Answers - A private, non-governmental organization who sets accounting and financial reporting standards for state and local governments Securities and Exchange Commission (SEC) - Answers - Regulates stock exchanges a) Has legal authority to regulate financial markets and accounting b) Usually defers to the FASB on accounting matters What is the Accounting Cycle and how does it work? - Answers - The accounting cycle is the procedure for analyzing, recording, summarizing, and preparing the transactions of a business. The accounting cycle works by turning transactions into financial statements through these steps: Step 1: Analyze Transactions Step 2: Record the effects of transactions Step 3: Summarize the effects Step 4: Prepare reports Can you explain the 'expanded' accounting equation? - Answers - Assets=Liabilities+(Capital Stock+Cumulative Net Income-Cumulative Dividends) What are the four financial statements covered in this module? - Answers - Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Retained Earnings Can you define and explain the purpose of the Balance Sheet and its components? - Answers - A balance sheet is the statement of the company's financial position at a certain period, and records the company's assets, liabilities, and owners' equity. The purpose of a balance sheet is to report the resources of a company, the company's obligations, and the owners' equity. The components of a balance sheet are: Assets, Liabilities, and Owner's equity. -) The balance sheet equation: Assets=Liabilities+Equity(ALE). -) Classified Balance Sheet: A balance sheet that distinguishes between current and long-term assets. Can you define and explain the purpose of the Income Statement and the components that it contains? - Answers - An income statement is the statement of earnings, and records the amount of revenue(profits) generated, and costs incurred(expenses) by a company during a period of time(a month, a quarter, a year). The purpose of an income statement is to assess a company's profitability by looking at the company's profits, and expenses. The income statement also summarizes the company's operations at a certain period. The components of an income statement are: revenues, expenses, and net income. Can you define and explain the purpose of the Statement of Retained Earnings and the components that it contains? - Answers - A statement of retained earnings identifies the changes in accumulated investments made by owners, and the losses/profits of a business since day one. The purpose of a statement of retained earnings is to identify changes in investments made by owners from the beginning of the statement to the end. The components of a statement of retained earnings are: Retained Earnings from the previous period, Net Income, and Dividends. Can you define and explain the purpose of the Statement of Cash Flows and the components that it contains? - Answers - A statement of cash flows reports the amount of cash collected and cash paid out by a company in operating, investing, and financing operations during a period of time. The purpose of a statement of cash flows is to provide information of cash inflows(receipts) and cash outflows(payments).The components of a statement of cash flows are: -) Operating activities: Which are normal business activities a) Examples of operating activities: Paying employees, paying rent, and collecting cash from customers. -) Investing activities: Associated with buying and selling long-term assets a) Examples of investing activities: Buying/selling land, Buying/selling equipment, etc. -) Financing activities: The activities in which cash is collected from or repaid to investors and creditors. a) Examples of financing activities: Borrowing money, repaying loans, and paying dividends Can you explain the importance of Notes to the Financial Statements and what is included in these notes? - Answers - The importance of Notes to the Financial Statements is that they give the information that is important, but not listed in the other statements, giving additional information we'd like to know. The notes of financial statements include a summary of Significant accounting policies, Additional information about the summary totals, Disclosure of information NOT recognized in the financial statements, and Any additional information